Economic data for the week was highlighted by a weaker-than-expected result for the prior quarter’s GDP and prior-month housing sales, but stronger showings in durable goods, jobless claims and the index of leading economic indicators.

Equity markets continued to grind higher in both the U.S. and abroad, with the latter helped by a sharp decline in the U.S. dollar, as the result of off-the-cuff comments from the administration. Bonds were flattish with little changes in interest rates, while commodities gained ground.

U.S. stocks gained for the week, with large caps outperforming small, to keep their relative lead intact for the year-to-date. From a sector standpoint, health care and consumer cyclicals led the way, due to merger activity in the former, while energy and industrials lagged with the smallest gains. A variety of earnings estimates came in stronger than expected, with broader market estimates being increased again—a flood of earnings reports will be coming through this coming week, which could drive market sentiment in the absence of surprises from the macro side or the President’s State of the Union address Tuesday night, which can serve to highlight areas of focus for the coming year.

The U.S. dollar fell sharply, by over -1.5% on the week, to its lowest level in three years, following Treasury Secretary Mnuchin ‘talking down’ the currency by acknowledging how a weaker dollar can benefit U.S. exports. While this is commonly held to be true in economic circles, it is unusual for a government official to admit as much—as they’ve typically stayed true to a more politically-palatable ‘strong dollar’ mantra over the years. This is done in no small part to keep foreign investor demand for U.S. treasury debt high. Mnuchin and other officials later back-pedaled to reduce the damage from the perceived misstep.

Foreign stocks fared better under the dollar backdrop, with developed market losses in local terms morphing into gains. Little news appeared to affect conditions outside the U.S., as the ECB and Bank of Japan met and kept current monetary policy unchanged, as expected, although improving economic conditions are creating questions about how long such accommodative policies will last this year. Interestingly, despite the positive outcome for U.S. investors, a weaker U.S. dollar relative to broader key currencies is bad news for foreign exporters, which could well have weighed on sentiment. Emerging markets fared even stronger, led by Brazil, which rallied as the unusual situation of a court dismissed the appeal of former president da Silva—most likely keeping him off the ballot in the new presidential election later this year.

U.S. bonds were little changed on the week in terms of total return, and while the U.S. Treasury yield curve was little changed on net, the 10-year yield reached its highest level in four years. Credit on both the investment-grade and high yield side outperformed, as did bank loans. To no surprise, foreign bonds in translated terms fared best, as the drop in USD outweighed other yield considerations, which were minimal, pushing foreign developed market debt into the lead for the week along with emerging market local debt.

Commodities gained several percent, led by strength in the energy sector predominately. Crude oil ticked higher by over +4%, finishing the week at $66.14, thanks to falling U.S. inventories and the sharp decline in the value of the U.S. dollar (in which oil and other commodities are generally priced). Natural gas prices rose even more sharply, over +7%, with falling inventories also a key factor.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.